4/20/2009 @ 6:00AM

Seagate's Hard Drive Toward Prosperity

The Scotts Valley, Calif.-based company has been stuck in a rut due to a weak market for its storage devices. As a result, Seagate’s quarterly earnings have been sliding for more than a year.

To stop the spinning, Chairman
Stephen
Luczo
Stephen Luczo
took the chief executive reigns again in January. But the board has been working hard at a turnaround, slashing 19% of Seagate’s workforce over the last year and reducing capital expenditures to cut costs.

Still, Luczo’s moves aren’t expected to help the company’s fiscal third-quarter earnings much. Analysts expect Seagate on Tuesday to report a loss of $0.44 cents a share, compared to earnings of $0.68 a share for the same period a year ago.

Seagate has pre-announced revenues of $2.1 billion for the quarter, down 38% from $3.4 billion a year ago.

But there are some signs that Seagate’s balance sheet might be moving back to equilibrium. ValuEngine, which rates a company’s overall attractiveness to investors, says that it still has an attractive size and price-to-sales ratio despite the company’s downward momentum.

And last week, Seagate said in its preliminary earnings results that it expects margins to be approximately 7%, slightly better than the company anticipated due to higher sales volume and spending controls. The company has $1.3 billion in cash and short-term investments, and $2.4 billion in total debt.